Hi,
After login into the device via usbnet and doing the following, the wi-fi connection appear to have been restored to normal and a firmware update followed.
Code:
cp /etc/wpa_supplicant/wpa_supplicant.conf.template
/etc/wpa_supplicant/wpa_supplicant.conf
The wpa_supplicant.conf file could have been corrupted with invalid parameters.
Alternatively, someone may prepare a KoboRoot.tgz with a single /etc/wpa_supplicant/wpa_supplicant.conf file packaged with the correct parameters (also note that it is supplied as wpa_supplicant.conf.template on the device).
Hope it helps,